Small Business Says Proposed Payroll Tax Cuts Do Not Go Far Enough

SYDNEY – November 16, 2010: VACC says the next Victorian Government should do more to support small business through tax reform.

The Brumby Government recently announced that, if re-elected, it would reduce Victoria’s payroll tax to 4.85 per cent – the lowest state rate for 36 years.

VACC is the peak automotive industry body in Victoria, with more than 5,500 small business members. VACC wants the next Victorian Government to not just further reduce payroll tax but to also increase the threshold at which the tax becomes applicable.

“A reduction in payroll tax is not enough in itself. To have any significant impact on small business, and to help ease the burden in real terms, a reduction in payroll tax must be accompanied by increasing the threshold at which it applies. Ultimately, we would like to see payroll tax repealed over the next two terms of Government,” VACC Executive Director, David Purchase, said.

“We call on the next Victorian Government to review payroll tax and to introduce measures to make it fairer. The current threshold of $550,000 is too low: $1million is a more reasonable level,” Mr Purchase said.

During the Henry Review, it was speculated that payroll tax could be taken over by the Commonwealth and harmonised across all States. VACC says this proposal is alarming to employers as it sounds like harmonisation means payroll tax will be increased.

VACC does not support a broadening of the payroll tax base to capture more employers or any increases in the rate. VACC does not support that increased tax collections fall solely on the small business sector.

VACC, in its ‘Issues for the Victorian Election’, also calls on the next Victorian Government to further reduce land tax on small business, repeal stamp duty on luxury cars and repeal the car parking levy (the tax paid by Melbourne CBD car park owners and employers).

“We keep being told small businesses are the engine room of the economy. If so, then the next Victorian Government must do more to support them. Right now, small businesses are being suffocated by taxation and red tape,” Mr Purchase said.